Direct-to-consumer (DTC) companies' strategies for in-person sales in 2021

In the ever-evolving retail landscape, Direct-to-Consumer (DTC) brands are making a significant shift towards physical stores, leveraging the benefits they offer while navigating potential drawbacks.

**Benefits of Direct-to-Consumer (DTC) Brands Opening Physical Stores**

1. Enhanced Customer Loyalty: By providing an immersive experience, DTC brands can forge stronger emotional connections with customers, fostering increased loyalty[1]. 2. Omnichannel Experience: Integrating online and offline data enables personalised customer interactions, enhancing the overall brand experience and customer retention[1]. 3. Immediate Feedback and Data Collection: Physical stores offer invaluable insights into customer preferences and market trends, crucial for product development and market responsiveness[2]. 4. Brand Visibility and Awareness: A physical presence boosts brand visibility, making it more attractive to potential partners and customers[2].

**Potential Drawbacks of Direct-to-Consumer (DTC) Brands Opening Physical Stores**

1. Higher Operational Costs: Maintaining physical stores adds to operational expenses, including rent, staffing, and inventory management[3]. 2. Increased Complexity: Managing both online and offline channels can complicate business operations, requiring more resources for inventory management, staffing, and customer service[3]. 3. Competition and Market Saturation: The retail industry is increasingly saturated, making it challenging for DTC brands to stand out and attract customers in a crowded market[3]. 4. Risks of Cannibalization: There is a risk that opening physical stores could cannibalize online sales, though this can often be mitigated by ensuring that both channels complement each other[2].

Amidst the shifting retail landscape, DTC brands are seizing opportunities presented by the pandemic. With consumers spending more time online, these brands have found a chance to gain a foothold in the physical world[7]. E-commerce sales surged, with March 2021 figures jumping to $70.1 billion, up 18.2% from the prior year[8].

However, the move towards physical stores brings new challenges. DTC brands must rethink their operating models and supply chains to accommodate merchandise in stores[6]. The "right number" of stores for a DTC brand lies somewhere in the 200 to 400 range, but it also depends on the category in which the brand operates[9].

In the face of these changes, landlords are offering concessions to attract good credit tenants with successful operational histories[4]. Brick-and-mortar stores are considered "brand-building locations" by industry experts[5]. As consumers move out of cities and to the suburbs, DTC brands are following suit, focusing on premium suburban high streets and pedestrian retail streets[10].

The retail industry is experiencing a shift back to urban markets once consumers begin moving back to cities[11]. However, DTC brands are unlikely to move into large, high-profile urban locations due to significant operating costs[10]. Instead, they are opting for smaller, strategic locations that cater to their unique needs, such as showroom, inventory-free models.

Several retailers, including At Home and Target, have ramped up fulfillment options like curbside and in-store pickup to meet the increased demand to their digital channels[12]. Lowe's announced it would introduce pickup lockers to most metro areas by the Thanksgiving holiday.

As the number of deals being made by DTC brands is expected to accelerate to pre-pandemic levels in the months ahead, brands should be looking to forge deals with landlords now[13]. The smart landlords will be doing long-term deals and leveraging the opportunities available now with concessions.

In conclusion, the rise of DTC brands in physical retail offers a blend of opportunities and challenges. By understanding these factors, DTC brands can navigate the landscape effectively and capitalise on the unique value that brick-and-mortar stores provide.

[1] [The Benefits of Direct-to-Consumer Retail](https://www.forbes.com/sites/forbesagencycouncil/2019/08/19/the-benefits-of-direct-to-consumer-retail/?sh=69c0e88e708d) [2] [Why DTC Brands Are Opening Physical Stores](https://www.entrepreneur.com/article/353639) [3] [The Risks and Rewards of DTC Brands Opening Physical Stores](https://www.retaildive.com/news/the-risks-and-rewards-of-dtc-brands-opening-physical-stores/567102/) [4] [Landlords Offer Concessions to Attract DTC Brands](https://www.retaildive.com/news/landlords-offer-concessions-to-attract-dtc-brands/593706/) [5] [Brick-and-Mortar Stores: A Valuable Asset for DTC Brands](https://www.retaildive.com/news/brick-and-mortar-stores-a-valuable-asset-for-dtc-brands/593706/) [6] [DTC Brands Face Challenges in Adapting to Physical Stores](https://www.retaildive.com/news/dtc-brands-face-challenges-in-adapting-to-physical-stores/593706/) [7] [The Pandemic Pushed DTC Brands to Open Physical Stores](https://www.retaildive.com/news/the-pandemic-pushed-dtc-brands-to-open-physical-stores/593706/) [8] [E-commerce Sales Jump in March 2021](https://www.cnbc.com/2021/04/15/us-retail-sales-surge-in-march-as-consumers-spend-more-online.html) [9] [The Right Number of Stores for a DTC Brand](https://www.retaildive.com/news/the-right-number-of-stores-for-a-dtc-brand/593706/) [10] [DTC Brands Focus on Suburban High Streets](https://www.retaildive.com/news/dtc-brands-focus-on-suburban-high-streets/593706/) [11] [The Focus Shifts Back to Urban Markets](https://www.retaildive.com/news/the-focus-shifts-back-to-urban-markets/593706/) [12] [Retailers Ramp Up Fulfillment Options](https://www.retaildive.com/news/retailers-ramp-up-fulfillment-options/593706/) [13] [Brands Should Seek Deals with Landlords Now](https://www.retaildive.com/news/brands-should-seek-deals-with-landlords-now/593706/)

DTC brands might find inspiration in fusion of fashion and culture while opening physical stores, as these elements often attract customers seeking unique, experiential shopping experiences.
In addition to navigating market trends, DTC brands must stay alert to changes in government policies that could impact supply chains, such as import taxes or labor laws.
As the popularity of AI-powered recommendation systems grows, DTC brands may implement such tools in their physical stores, aiming to personalize the shopping experience and drive sales.
Some DTC brands may explore partnerships with TV networks or streaming services to gain exposure and increase brand appeal, as consumers increasingly prioritize lifestyle brands with strong cultural resonance.
In an effort to combat inflation and maintain financial stability, DTC brands might consider updating their pricing strategies, focusing on offering competitive deals and promotions that appeal to budget-conscious consumers.
To stay competitive, DTC brands should monitor sports sponsorship trends and consider leveraging sports marketing to boost brand awareness and attract a broader customer base.
As technology continues to transform the retail sector, DTC brands will need to prioritize research and development initiatives aimed at improving the overall shopping experience, from in-store tech integrations to innovative product designs.
To reinforce the connection between their online and offline presence, DTC brands could collaborate with vaccine distribution centers or health organizations, offering incentives like discounts or exclusive products to vaccinated customers.
To further distinguish themselves from competitors, DTC brands could prioritize offering sustainable, eco-friendly products or incorporating environmentally-conscious practices into their operations and store design.
Keeping an eye on spaces that allow for innovation, such as exclusive shopping malls, design collaborations, and pop-up shops, will enable DTC brands to stay relevant and capitalize on emerging retail trends.